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Twitch: The Future Is Streaming, Live

Twitch, a wildly popular live-streaming platform for gamers, looks to become the next major broadcaster of our lives

Twitch: Gaming Alone, Together

Founded in 2011, Twitch is emblematic of the democratization of content and financial flows we see everywhere in today’s gig economy [1]. A live-streaming video platform, Twitch enables anyone to publicly broadcast their own content on camera in real time (i.e., streamers) and anyone to watch, comment on, and even participate in that content (i.e., viewers) [2]. Streamers can also record live broadcasts and post them for on-demand viewing later. In contrast to Snapchat, Facebook Live, or Instagram, Twitch focuses on content live-streamed publicly, rather than to a closed group of friends, and generally for periods longer than a few minutes. Perhaps unsurprising given its gaming origins, Twitch uses gamification to make the experience on the platform more addictive, such as leaderboards for subscribers and exclusive badges and emoticons [3]. The platform has exploded in popularity over the past eight years – with average concurrent viewers hitting one million last year [4] – and has created enormous value for viewers, streamers, advertisers, and as of 2014, Amazon.

At a high level, like any good platform, Twitch creates value by aggregating supply and demand and in this case, lowering search costs for all sides. By gathering millions of viewers on the same platform, streamers can build audiences more easily and viewers can more easily find the streamers they like as well as other viewers they’d like to connect with. Similarly, Twitch has aggregated on its platform a large base of similar (and highly engaged) consumers for advertisers to target.

Viewers

Besides lowering search costs, Twitch allows fans to enjoy the thrill of watching other, often more talented gamers play (or crafters craft, etc.) in real time [5]. Live chat rooms alongside the streaming window give viewers opportunities to feel connected to these personalities, as streamers often comment on the group chat while broadcasting and can translate that connection into involvement by adjusting their behavior based on viewer input (e.g., land in this area) [2]. As viewers often have intense shared interests, Twitch also fosters community among viewers with these group chats as well as direct messaging.

Streamers

Twitch creates substantial emotional value for streamers by providing them a platform to showcase their skills and personalities and fosters feelings of connection from the streamer back to the viewers. More practically, by placing ads, facilitating product placement, and enabling paid subscriptions and micro-donations (called “Bits”) to specific streamers, Twitch enables streamers to derive significant financial benefits from livestreaming [6] [7]. One of the most famous streamers, Ninja, made nearly $10 million last year [8]. (Twitch, of course, takes a cut of advertising revenue, paid subscriptions, and Bits, in addition to paid streaming partnerships with gaming companies, music concerts, and the NBA, among others [5] [6] [9] [12].)

From HBS Digital Initiative

For advertisers, Twitch provides valuable access to a core demographic – millennials – and access at a time when this valuable group is emotionally involved and more open to advertising. The demographic on Twitch is also likely to have cut the cable cord and enabled ad blockers, making warm product placements especially valuable for advertisers [10]. French President Emmanuel Macron has even hosted a debate on Twitch to boost viewership among young people [11].

Amazon

The acquisition of Twitch has allowed Amazon to cross-promote its Amazon Prime offering on Twitch and vice versa [3], but likely more importantly, Twitch gives Amazon additional data on viewing habits to more effectively target product suggestions (e.g., cooking channel viewers may want cooking supplies, gamers additional games). Potentially, viewing habits could also inform Amazon Prime content creation. A strong impetus for the acquisition was likely a desire to retake some of the online advertising pie from Google’s YouTube [13], a push Amazon is sustaining by aggressively expanding Twitch into non-gaming channels to lure advertisers to a wider audience [14].

Looking Ahead: Life, Streaming Live

While Twitch’s core remains gaming, the platform has expanded into talk shows, crafting, music festivals, even interactive farm animal feeding. Is it possible that Twitch represents “the future of live television,” given its interactive and cooperative nature? [4] [15] Scripted content producers like Hulu and Netflix may be cheering the demise of Big Cable, but platforms like Twitch may have the last laugh.

2 thoughts on “Twitch: The Future Is Streaming, Live”

Twitch is definitely a possible competitor to traditional media services. However, I wonder to what extent they are substitutes or complements. Personally, I do not see scripted TV and Twitch streaming as providing nearly the same experience or filling the same need for users. Is it possible that Twitch and TV / online video are totally separate markets?

Marissa,
Thank you for this interesting article. Twitch’s strong user engagement always fascinated me.
The question that comes to mind is whether Twitch will be able to successfully expand beyond gaming.
Gaming and general videos / livestreaming have significantly different user bases – gaming targets a small set of users with very high levels of engagement, while general videos and live streaming caters to a much larger audience base who, on average, are less engaged.
Twitch also needs to accomplish this in the face of severe competition. As a three-sided platforms connecting viewers, content creators and advertisers, Twitch will be especially difficult to scale. The good news is that it has Amazon’s support. Amazon provides not only deep pockets, technical expertise, but most importantly, the need to compete with Google at all costs.
The final question is what Twitch aspires to be eventually. Does it want to copy YouTube and become what Bing is to Google Search, or should it develop a differentiated experience and be what Alexa is to Google Search.